To help ‘Smart Cities’, Sebi approves norms for issuance and listing of municipal bonds.
The Securities and Exchange Board of India has cleared the framework to set up international financial services centres (IFSC), approved rules for municipalities to issue and list bonds and made it easier for banks to take control of listed companies in financial distress by converting loans into equity.
The board of the market regulator also approved a roadmap for the new fiscal year, when it is expected to unveil rules to help startups raise funds through crowdfunding and institutional trading platform, as well as measures such as e-IPO and e-KYC to make it easier to invest in the market. It has also decided to tighten disclosure rules.
Foreign stock exchanges, clearing corporations and depositories can set up operations in IFSCs, which will be developed on the lines of global financial centres of Singapore and Dubai. The guidelines permit issue of depositary receipts and debt securities in IFSCs by domestic as well as foreign companies, subject to foreign companies, subject to foreign currency depository regulations.
“The new IFSC guidelines would help create vibrant capital market activities in such centres. Stock exchanges and clearing corporations would be provided concessions for setting up ventures in the IFSCs,” Sebi chairman UK Sinha told reporters in New Delhi on Sunday after the board meeting, which was addressed by finance minister Arun Jaitley.
“All existing exchanges would be allowed to set up their subsidiaries in the IFSC under the relaxed regimes,” Jaitley said.
On whether securities transaction tax would be applicable on trades on exchanges in the IFSC, Sinha said it was for the government to clarify.
The framework approved on Sunday paves the way for the country’s first such enclave, Gujarat International Finance Tec-City (GIFT), which is coming up in the western state.
When asked about the merger of the Forward Markets Commission with Sebi, proposed by him in the Budget, Jaitley said this was also an issue of the discussion.
“They (Sebi) talked about capacity building at Sebi, both in terms of ability to acquaint with the subjects and other infrastructure requirements,” the minister said, after his customary post-Budget address to the Sebi board.
Framework for MUNIs
The board approved the regulatory framework for issuance and listing of debt securities by municipalities, a move that would help channelise household savings towards development of urban infrastructure. This would allow authorities to raise funds, including for setting up of smart cities, from the public and institutional investors, Sinha said.
To issue bonds, municipal authorities need to have a strong financial track record. Sinha said such bonds would add to instruments where provident funds, pension funds and insurance companies can put in their money.
Bonds can be issued for projects and revenue from such projects will have to be kept in escrow accounts. Municipalities should not have defaulted in repayments of debt securities or loans from banks or financial institutions during the previous 365 days to issue bonds. General obligation bonds, where the money is repaid through taxation or revenue received from projects, cannot be sold to the public.
Conversion of debt into equity by banks
Tighter disclosure normsListed companies will have to disclose outcome of their board meetings within 30 minutes after their closure.
They will also have to make public on all materially important events and information within 24 hours. The Sebi board also decided to remove the restrictions on fund managers for managing offshore funds These relaxations will be subject to allotment price being as per the fair price formula. It cannot be less than face value.
By ET Bureau | 23 Mar, 2015, 03.
Giving thumbs up to Modi government’s focus on developing smart cities, Michael Bloomberg, UN Secretary General’s Special Envoy for Cities & Climate Change on Monday said, “From my experience, he (PM Modi) is absolutely correct to make cities a central focus of his work.”
“The more India invests in sustainable cities, the stronger its economy will grow,” Bloomberg said. Giving a special address at RE-INVEST 2015, Bloomberg said, “Prime Minister Modi is showing that confronting climate change goes hand-in-hand with smart economic growth.”
Bloomberg urged both India’s private sector and foreign investors to continue developing and investing in the clean energy market which create “knowledge-intensive jobs and support the nation’s goals”.
Power Minister Piyush Goyal assured that the government will make sure that the investments in India will be protected and encouraged. He said for a new investment destination the prerequisite is an atmosphere which makes to do business easier, consistency in policies, bankable contracts and prevalence of rule of law in the country.
Goyal sought to assure investors that though the government is pro-poor, it understands the problems of business and will act as a facilitator.